Weighted Average Cost Of Capital

Wells Fargo Advantage Funds - Allsp... (EAD)


-0.01 (-0.14%)
Share price $ 6.96
Beta 0.834
Diluted Shares Outstanding 60.46
Cost of Debt
Tax Rate 0.00
After-tax Cost of Debt 0.84%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.467
Total Debt 194
Total Equity 420.79
Total Capital 614.79
Debt Weighting 31.56
Equity Weighting 68.44

There are a number of methods that can be used to determine discount rates. A good approach – and the one we’ll use in this tutorial – is to use the weighted average cost of capital (WACC) – a blend of the cost of equity and after-tax cost of debt. A company has two primary sources of financing – debt and equity – and, in simple terms, WACC is the average cost of raising that money. WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight and then adding the products together to determine the WACC value.